Steinhoff’s Teflon dons escape censure — yet again
Along time ago, when the then activist and trade unionist Jayendra Naidoo was put in charge of negotiating the arms deal, I met him at parliament and asked how it was going. With him at the helm, it felt like as good a deal as possible would be struck with the arms merchants from the North, even though a peaceful South Africa did not need to make restocking the defence force its first big purchase. His response surprised me. It was full of swagger and bravado. “Why? Do you want a ride in one of the machines?” It was the last thing on my wish list, but his attitude made it clear that the merchants had done their job of selling our trade negotiators things we didn’t need at a price we couldn’t afford.
The arms deal is a stain on South Africa. Not a single one of the jobs and investment trade-offs negotiated by Naidoo with the big multinational arms companies has panned out, and the price of the arms deal strained the budget when funds were needed elsewhere. Naidoo and his fellow negotiators signed up to ludicrous contracts even as young National Treasury officials and civil society activists pointed out that these had a history of failure across the globe.
Teflon Jay did not pay. In fact, he went on to greater things, building a significant business empire in the J&J Group with Jay Naidoo, the other union leader. It was one of those old-fashioned BEE holding companies where the political connections of the owners won them huge stakes as corporate South Africa tried to get on with it. Now Naidoo has quietly slipped out of another tight spot. He was Markus Jooste’s go-to black partner in Steinhoff, where he sat on the advisory board, but hot-footed it to the subsidiary African company, Star, which he now chairs.
Naidoo’s trying to put a mile between him and Steinhoff because his
Lancaster Group got R9.3-billion in funding from the Public Investment
Corporation to buy into Star, which houses prime retail brands like Pep.
This doubles the PIC’s exposure to Steinhoff and imperils the public as we carry the risk for the government pension fund’s investment house. Teflon Jay is off the hook. Again. So is Len Konar, another
Steinhoff board member who was asleep at the wheel as Jooste took them for a ride, and not on his ponies.
Konar, who styles himself as Mr Corporate Governance, sits on more boards than any other nonexecutive director in the country. He lectures regularly on governance, but should he? Konar was also on the Lonmin board (along with now President Cyril Ramaphosa, but that’s a story for another day) when the Marikana massacre happened. As the lead and most experienced director, should he not have questioned the rapidly souring labour relations at the company? At Steinhoff, the board knew in August that German investigators had raided the company’s premises on suspicion of fraud. Should they have asked questions? Konar did not, and neither did the other luminaries who were meant to oversee Jooste’s plans to turn Steinhoff into a new Ikea. Now Konar is off that board (and off Lonmin’s too) as this other Teflon man gets off without question.
Of course, the biggest Teflon don, formerly of Steinhoff, is Christo Wiese, who lost almost his entire fortune after ploughing it into the company. He is suing Jooste, his prodigal corporate son, and he has largely escaped censure, although some may argue that losing billions is quite punishing. In 2012 Wiese, on a flight from London to Luxembourg, was found with US$1-million cash, but he escaped real scrutiny.
Business leaders are often treated with kid gloves, and are subject to none of the rigour that stewardship of the money of ordinary people should compel. Coronation, which took a R14-billion haircut for its stake in Steinhoff, has now promised greater scepticism in its investment decisions — in other words, it’s time something stuck to these Teflon dons.
This doubles the PIC’s exposure to Steinhoff — and the public carries the risk for the investor